On December 1, 2014, Nicole Company gave Dawn Company a P200,000, 12% loan. Nicole Company paid proceeds of P 194,000 after the deduction of a P6,000 nonrefundable loan origination fee. Principal and interest are due in sixty monthly installments of P 4,450, beginning January 1, 2015. The repayment yield an effective interest rate of 12% at a present value of P 200,000 and 13.4% at a present value of P 194,000. A. What amount of interest income should be reported in 2014? B. What amount should be reported as accrued interest receivable on December 31, 2014?
On December 1, 2014, Nicole Company gave Dawn Company a P200,000, 12% loan. Nicole Company paid proceeds of P 194,000 after the deduction of a P6,000 nonrefundable loan origination fee. Principal and interest are due in sixty monthly installments of P 4,450, beginning January 1, 2015. The repayment yield an effective interest rate of 12% at a present value of P 200,000 and 13.4% at a present value of P 194,000. A. What amount of interest income should be reported in 2014? B. What amount should be reported as accrued interest receivable on December 31, 2014?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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On December 1, 2014, Nicole Company gave Dawn Company a P200,000,
12% loan. Nicole Company paid proceeds of P 194,000 after the deduction of a P6,000 nonrefundable loan origination fee. Principal and interest are due in sixty monthly installments of
P 4,450, beginning January 1, 2015. The repayment yield an effective interest rate of 12% at a
A. What amount of interest income should be reported in 2014?
B. What amount should be reported as accrued interest receivable on December 31, 2014?
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